On the cusp of pouring its first gravity gold this month, Meeka Metals has put together a $60 million share placement to expand its Murchison project operations.
The company intends to combine the capital raise proceeds with its cash reserves to expand and accelerate its open pit operations by mobilising a third mining fleet and picking up the pace on its underground drilling.
The new machinery will include a 200-tonne digger and a fleet of 140t trucks.
The company will also settle on a pathway to expand its processing capacity beyond the current 600,000 tonnes per annum throughput.
One way to achieve this might be to add another ball mill and extra tanks at its mill. The process will require careful deliberation and modelling, as a new feed loading would typically increase the required capacities of the crushing circuit, process water supply, site pumpage and power generation.
And the faster a plant swallows ore, the more the ore discovery rate needs grow, which then requires more drilling and faster mine development - whether open-pit or underground.
Meeka Metals managing director Tim Davidson said: “With this funding in place, the company is now focused on maximising the expanded open-pit mining opportunity, confirming the pathway to bring forward production with increased processing capacity and defining further growth opportunities with the drill bit.”
Meeka says it has received firm commitments from existing institutional investors and strong support from new domestic and international institutional investors to participate in the placement, which seeks to raise $60M before costs at $0.15 per share.
The pricing represents a 4.1 per cent discount to the 20-day volume-weighted average price (VWAP) and a 10.3 per cent discount to the 10-day VWAP. The placement will be completed under Meeka’s current placement capacity.
Petra Capital acted as sole lead manager and book-runner for the placement, while Morgans Corporate was a co-manager. The placement will settle on June 24.
Meeka's most recent 2012 JORC-compliant total mineral resource estimate for its Murchison Project is 1.2 million ounces at an average grade of 3 grams per tonne gold.
The project comprises a 281 square kilometre landholding on granted mining leases in the Murchison goldfields, about 50 kilometres north of Meekatharra.
The company’s feasibility study, released last December, focussed on restarting the company’s fully permitted Andy Well mill and outlined 10-years of production, ramping up to 76,000 ounces after averaging 65,000 ounces per year through the first seven years.
The study projects an undiscounted pre-tax free cash flow of $1 billion, a net present value of $616 million and an internal rate of return of 180 per cent.
It’s a busy time for the company, as site activity ramps up and wet commissioning of the processing plant gets underway. Meeka expects to pour its first gold this month from its initial gravity gold flow.
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By Doug Bright
